University Car Wash built a deluxe car wash across the street from campus. The new machines cost $270,000 including installation. The company estimates that the equipment will have a residual value of $24,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows:

Year Hours Used

1 3,100

2 1,100

3 1,200

4 2,800

5 2,600

6 1,200

Prepare a depreciation schedule for six years using the straight-line method.

Question

Business

Talan Branch

6 May, 10:47

University Car Wash built a deluxe car wash across the street from campus. The new machines cost $270,000 including installation. The company estimates that the equipment will have a residual value of $24,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows:

Year Hours Used

1 3,100

2 1,100

3 1,200

4 2,800

5 2,600

6 1,200

Prepare a depreciation schedule for six years using the straight-line method.

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Answers (1)

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Kiana Wiley · Answer 1

The preparation of depreciation schedule is shown below:-

1. Depreciation expense on straight line = $270,000 - $24,000 : 6

= $41,000

Depreciation Schedule - Straight Line Method

End of Year amounts

Year Depreciation Accumulated Book Value

Expense Depreciation

1 $41,000 $41,000 $229,000

2 $41,000 $82,000 $188,000

3 $41,000 $123,000 $147,000

4 $41,000 $164,000 $106,000

5 $41,000 $205,000 $65,000

6 $41,000 $246,000 $24,000

Total = $246,000